Leading institutional investors consider potential class action collaboration

Some of the world’s leading asset owners are considering the possibility of working together on litigation and class action lawsuits to cut costs, as part of an initiative headed by Japan’s Government Pension Investment Fund and California pension giants CalPERS and CalSTRS.

The GPIF said the topic was raised at the most recent meeting of the Global Asset Owners’ Forum, a new group that aims to “foster the exchange of ideas and opinions among global public pension funds” on ESG issues.

“Many global asset owners are involved in similar legal litigations and class action lawsuits associated with their investments,” the fund says in its new summary of the event, which took place in May in California.

“In cases where close collaboration is warranted, asset owners can potentially reduce litigation cost by leveraging and sharing each other’s legal expertise and research.” It goes on to say that the forum is considering a follow up discussion on potential legal collaboration this autumn.

The meeting – the forum’s second – featured not just the GPIF and the two California funds but also the Florida State Board of Administration, the World Bank Treasury, the Harvard Endowment and major pension funds from Canada and France.

The issue had been raised at the first meeting of the group in Tokyo in November last year. That event was attended by the likes of the Netherlands’ APG and PGGM, Sweden’s AP2 and the UK’s RPMI Railpen and USS.

The report of that meeting identified “a networking opportunity for our legal professionals in order to leverage and share each other’s legal expertise and research”. This could be “instrumental” in reducing litigation costs.

Other issues raised at the May meeting, the summary says, included: clarification and definition of ESG terminology; the need for ESG ratings companies to disclose their methodology; and staff incentives within asset management firms.

The $1.3trn GPIF, which has sued the local affiliate of accounting firm Ernst & Young over investment losses deriving from Toshiba accounting scandal in 2015, is ramping up its ESG stance having earlier this month started to allocate a huge planned ¥3trnshift into shares with strong ESG characteristics.

The GPIF’s ESG issues are headed up by its Chief Investment Officer Hiro Mizuno. Speaking at RI Europe last month, Mizuno – a director of the Principles for Responsible Investment – said more needed to be done on ESG investment.